Suspending the near term euphoria for a moment and forgetting the time frame under analysis, just merely looking at the chart, one would be hard pressed to build the case for a bullish view.
Comparatively, US stocks, with better looking trends, the UK’s main index has been trading largely in a box for 30 years. With the exception of the bull market from ‘89 to the Dotcom burst a decade later, the market has been in a macro consolidation with 6000-6500 a key level of significance (KLoS) providing stiff resistance, often coinciding with violent down moves at critical market turns when the market gives back significant market gains. The EU/EM/Oil crisis was an exception but only because the market was accustomed and addicted to the new market opiate and stimulus called QE, so it limped along until the Covid shock.
From its peak at nearly 8000 to the March low, the fall is near in magnitude to the previous capitulations but the rebound is unconvincing and I am not sure this particular index is done vomiting, given the weak relief rally and stocks divergence from the economy, with Q2 still to digest. the next move down could be a loosening of its bowels.
So, the market is back at or around various KLoS:
-6000 (psychological round number).
-6231, a previous geometric pattern price target and inverse head & shoulders pattern neckline where the Shanghai Accord supported the market, as well as the following edge of the bear flag/?broadening pattern just below 6500.
-6500 which has previously sounded the death knell for the market, with the Dotcom burst, 2008 Crisis and The EU/EM/Oil crisis.
The obvious head winds are a C-19 second wave, dire Q2 data and Brexit but the US/China spat casts a long shadow and any number of other myriad geo sociopolitical events currently plaguing and roiling the markets could send this market lower. There is precious little cheerful or positive to lift this market.
Comparatively, US stocks, with better looking trends, the UK’s main index has been trading largely in a box for 30 years. With the exception of the bull market from ‘89 to the Dotcom burst a decade later, the market has been in a macro consolidation with 6000-6500 a key level of significance (KLoS) providing stiff resistance, often coinciding with violent down moves at critical market turns when the market gives back significant market gains. The EU/EM/Oil crisis was an exception but only because the market was accustomed and addicted to the new market opiate and stimulus called QE, so it limped along until the Covid shock.
From its peak at nearly 8000 to the March low, the fall is near in magnitude to the previous capitulations but the rebound is unconvincing and I am not sure this particular index is done vomiting, given the weak relief rally and stocks divergence from the economy, with Q2 still to digest. the next move down could be a loosening of its bowels.
So, the market is back at or around various KLoS:
-6000 (psychological round number).
-6231, a previous geometric pattern price target and inverse head & shoulders pattern neckline where the Shanghai Accord supported the market, as well as the following edge of the bear flag/?broadening pattern just below 6500.
-6500 which has previously sounded the death knell for the market, with the Dotcom burst, 2008 Crisis and The EU/EM/Oil crisis.
The obvious head winds are a C-19 second wave, dire Q2 data and Brexit but the US/China spat casts a long shadow and any number of other myriad geo sociopolitical events currently plaguing and roiling the markets could send this market lower. There is precious little cheerful or positive to lift this market.